Tag Archives: personal finance

All the money I’ve wasted renting

money wasted while renting

Ten years of renting was a few too many, personally.

Non refundable agent’s fees

A week’s rent plus GST – many, many times over.

Bonds you never see in full again

Fair enough in some cases, but definitely not in others.  And as a tenant you’re at a vast disadvantage here.

Carpet cleaning

Expensive carpet cleaning fees are included in leases by agencies – big and small alike – everywhere. Tenancy law information online seems to suggest these are unlawful, or ‘unenforceable’, but practically speaking, if it’s in the contract what are you going to do, kick up a fuss? There’s a dire shortage of housing in Auckland and it’s hard enough to secure a rental as it is.

Dodgy utilities

I was briefly in a very strange situation where I was in charge of the power bill, and everyone was supposed to split it evenly with me, but there was also a separate couple subletting the self contained downstairs rooms from one of the other flatmates/tenants (who was also the mother of my friend and fellow flatmate), and that flatmate was charging them a flat all inclusive rent and not including them in the power bill split. Yeah, try wrapping your head around that. Then there was the shitty apartment where you had to use their electricity provider – there was no other choice – and that provider had only one plan and no low user option, meaning we were stuck with higher prices than we would be paying on the free market.

Buying and selling things

Every move forces change of some sort – buying or selling appliances and/or furniture depending on each individual property’s size and what is or isn’t provided with it. Fridges, washing machines, tables, couches … It gets old.

Lost and broken stuff

I’ve had countless possessions go missing or break due to flatmates. No point having nice stuff.

And I can’t put a dollar amount on it, but…

So much time and stress. Taking time off during the work day to dart out to viewings (always within business hours) and to agency offices to sign papers.

Literally months of uncertainty over the years when you know you have to move and scramble to find a new place (about six months total in 2015 alone).

Fighting shitty landlords trying to blame us for things going wrong with the house, so they wouldn’t have to foot the bill for their own maintenance and repairs.

So, so glad not to be living what amounts to a temporary life anymore.

Adventures in first home buying

Buying a first house in AucklandThis was not how I pictured myself buying a house.

I imagined being blissfully married, with two reliable incomes, a solid savings history, starting to think about a family, maybe.

None of this was true in 2016.

But the main thing is I now have a stable place to call home. It means the world to me to have a house of my own, after two years of living in a holding pattern. The last few months in particular have been the textbook definition of ‘transitory period’ and I’m so ready to put them behind me.

A few false starts

I lost track of how many houses I saw. Dozens upon dozens. But here are the ones that came close.

The first one I saw was a cute early 1900s bungalow with a country feel, hardwood floors and nice outdoor flow. But conversely, there was no available information upfront about what updates (if any) had been done to bring it up to code, the kitchen was cramped and there was only one minuscule wardrobe (this was a tiny place with barely two bedrooms).

The next one I liked was a similarly country-feeling house, except this one was actually semi-rural, with a septic tank and all! Again only two bedrooms, but it was the location that gave me pause – it was just a little too far away. Plus, it was on a unit title, something I’d rather avoid.

Then there was an unassuming duplex that dropped my jaw once I stepped inside. Perfection in every way. There was even an adorable spiral staircase. The buts: it was two stories rather than single level, attached to another unit, parking was limited, and it was cross lease.

This one ticked basically all the boxes. Liveable off the bat, solid bones, sunny and cosy. Of course there are things I’d like to do but they can be tackled slowly and aren’t major or urgent, and there’s room to renovate.

But how do I actually do this?

I have yet to find ANYWHERE a brutally detailed, step by step guide to buying a house in New Zealand. I had basically no idea what to expect at each stage. There are bits and pieces of info online but what I desperately wanted was a thorough walk-through. I hope to never ever do this again in my entire life … but just in case, I’ve recorded the process for reference. Here’s my experience of buying a house by negotiation in Auckland.

Apply for mortgage preapproval

Meet with broker, do paperwork, gather supporting documentation.

COMMENCE STRESS AND WAITING.

I was applying for a Welcome Home loan, which takes quite a long time to process – two weeks in this case. It was an immense relief when it finally came (I was half convinced I would be rejected, given my usually stellar records had taken a big hit thanks to the whole unemployed partner debacle) and I had a wee lie down on the floor after opening that joyous email.

Start going to open homes

Graduate from stalking listings online to actually going out and seeing properties.

SO EXHAUSTING.

Endless viewings every weekend; scrambling to view new listings after work before they get snapped up. And then emailing my broker about every individual listing that I was seriously considering. Bleh.

Negotiating/Making an offer

AKA welcome to Stressville.

This house was listed as ‘deadline private treaty’ – aka get your offers in by a certain date. That date was about a month out and I could tell it wouldn’t get anywhere near that point. Indeed, after one look around I knew it would go like hot cakes; we got there about 10 minutes into the first open home, and there was already at least one offer in.

Getting mine in apparently involved signing a non binding  ‘offer to purchase’ form, which looked ridiculously informal. Scribble in your offer amount, desired conditions … and then text a photo to the agent. I wish I was kidding.

We popped back the following day for the second open home, which confirmed my first impressions. There were even more offers by this time. After this viewing, the negotiation commenced that same evening. It was an exhausting and inefficient round robin over the phone, slowly whittling down the eight bidders to one.

You know, I had all these grand notions about crafting an emotive personal letter to submit with my offer that would dazzle the sellers and help secure my bid … but this didn’t happen. In the end it had no bearing on the situation, and it was only money that talked.

Getting the call to say I’d gotten the house was pretty surreal. Then came a congratulatory text from the agent, and a bit of emoji-heavy banter back and forth.

Sealing the deal

Forget Stressville, now we’re in Stress City.

Hurrah for long weekends. On Auckland Anniversary, I went in to sign the sale and purchase agreement and organise to pay the deposit. The contract was a super daunting document in some ways and yet so underwhelming in others. It wasn’t totally unfamiliar to me, as the agent for the very first house I went to actually gave us an S&P agreement to take away. Then the contract was sent to the broker and lawyer, and the wheels set in motion for the next phase.

Working through the conditions

No rest for the wicked.

The agent provided a LIM report, so I just had to confirm finance and organise a building inspection. Seriously – the longest five working days of my life. And as if I didn’t have enough on my plate already, I had to contend with daily calls/texts from the agent nagging me for updates and reminding me about all the backup offers on the table. Duuuude.

More paperwork than you’ve ever dreamed of

So much you could drown in it, if the papercuts didn’t kill you first.

KiwiSaver first home withdrawal forms.

More bank forms (including a terrifyingly huge number called Priority Sum. I’d never heard of it. Still couldn’t explain it to you, really. Thank god for Google).

Confirming mortgage structure and interest rates.

Getting house insurance.

And income/life insurance.

Organising account setup with the new bank.

The land transfer form.

More bank forms (these ones signed in person at the lawyer’s office) and title form.

Waiting for the vendor’s lawyer to send through the final settlement statement with sum to settle.

A minor panic when it came time to transfer the balance to the trust account, and the lawyer’s deposit slip seemed to have some extra digits at the end of the bank account – as if my nerves weren’t already shot enough!

(I accept no responsibility for any inaccuracies in the naming of the documents listed above.)

Settlement day

AKA the most nerve wracking day of all.

My lawyer had told me not to worry if I didn’t hear anything from her during the day. That would probably be a bad thing – it means something’s gone wrong. Just hang tight.

The first person I heard from was the agent. About 11.30, he texted saying they had the all clear to give me the keys, and could he drop them off to my office? (Um, YES.)

A couple hours later the lawyer emailed to wrap things up. And boom, hello homeownership.

* * *

A garden, a dog, compost, chickens (well, eventually). Farms and bush around the corner, the beaches not too much further.

This is everything I have been dreaming of.

The intersection of capability and circumstance (in personal finance)

financial capability nz

A few months ago I accepted a new position that perfectly suits my nerdy, money-loving heart – one with the overarching aim of helping people get ahead financially.

Very early on, I got to attend a particularly enlightening conference (the video below comes from that) and also a community workshop in a lower socio-economic area of Auckland. Let’s just say the challenge is huge. More than ever, I’m coming to understand the complexity of the issue: it’s not just about individual efforts and bootstrapping, it’s about human nature and psychology – and of course, the wider system.

In a country like New Zealand, where the cost of living is pretty astronomical, budgeting can only take you so far. Where housing costs are out of control, home ownership is spiralling out of reach, the rental market is squeezed and the condition of rentals is a public health issue. Where public transport is pretty abysmal, and low-income households often lack access to a vehicle, and therefore, supermarkets and healthy food options. Where certain cultural norms mean that family can either be a boost or a drag, holding individuals back from getting ahead. Where high burglary rates mean frequent setbacks, unless you can afford excellent insurance. Where people being locked out of the property market today is going to have huge ramifications when this generation reaches retirement.

True, some people don’t have huge lofty goals and aren’t particularly interested in ‘getting ahead’. But we can’t get away from the fact that we live in a capitalist society, and you need money to exist in it. Inflation is a fact of life; things are only ever going to get more expensive. We’re already a low-wage economy, and if your income remains stagnant, you’re going to wind up at the wrong end of the inequality gap – a yawning gap that’s only growing. I for one don’t want to wind up being a burden on society. So I was really happy to see a session on upskilling and increasing your earnings as part of that community programme, because spending is only half of the equation. It doesn’t matter how good you are at budgeting, if you don’t have enough money coming in, you’ll never get ahead.

 

Sure, let’s build financial capability so people are better equipped to deal with whatever circumstances life may throw at them. (Pretty much everyone can and should be doing better, to varying degrees.) But it’s about more than that. Health, family, educational, church systems – all contribute to financial wellbeing. IMO so much hinges on those early years; if you start out behind it’s a lot harder to catch up and overcome setbacks. And the worse that things are for you now, the harder it is to think about the future.

(For one of the best posts I’ve read on this topic, head over to Frugalwoods.)

I’ve been fortunate on the health, employment, family fronts. Not everyone has the luxury of that kind of head start. You need to be able to get ahead of yourself in the first place, to get ahead of your paycheck, build up a buffer, get a reliable vehicle, secure your housing situation.

And yet, I came on board at a personally tumultuous time, financially speaking. By the CFSI’s reckoning, I was probably a bit closer to Financially Tenuous rather than my usual Financially Striving. It was so, so hard to come into work every day, think about personal finance, listen to coworkers’ tales of buying houses, all while shit was falling apart in my own life. Despite that, I’m so happy to be doing what I’m doing. I feel like it’s the perfect time to join the fray – financial capability is on the political agenda, recent legislative changes have improved consumer protection around credit and disclosure, and we’ve only just begun.

The differences between white collar job hunting and blue collar job hunting

White collar job hunting vs blue collar job huntingHere’s a post that’s been percolating for a while, based on observations I’ve made. I’ll broadly differentiate as white vs blue collar, though I’m counting, say, non-office-based sales work here under the blue collar umbrella.

Getting the job

The interview-to-offer ratio

In my experience in the white collar world, employers work hard to shortlist very few candidates and only interview a couple in person. On the other hand, blue collar employers seem to bring people in willy nilly. I am deadly serious when I say T has been to more job interviews in a single week of job hunting than I have in my entire career. So many interviews, so few offers. So much time wasted bringing someone in just for a chat. Ever heard of phone screening?

The sheer difficulty of interviewing

Interviewing when you’re unemployed isn’t too hard, logistically. But if you’re still employed?

Well, for me it’s never been a biggie. I can take my lunch whenever I want and have the flexibility to duck out to appointments during the day if needed, and make time up. For him? Breaks are strictly timed, usually at set times. That makes it pretty hard to get away for an interview during the day, unless it happens to be on the same street. And again, refer to the first point above about the sheer number of interviews required to get anywhere.

On the job

Transport costs

Speaking of that inflexibility, that often necessitates having a reliable vehicle so you can be sure of getting to work on time every day. And if you work anything outside of 9-5, you can definitely write off public transport as an option. Yet it’s probably a struggle – at the very least, when you’re starting out – to afford a decent car. So much irony: low-level job, strict hours, struggling to afford transport in order to keep said job.

Blue collar jobs are much more spread out over the whole city, whereas white collar employment is more concentrated in town. This further complicates the whole transport issue (‘just move closer to work’ isn’t that simple).

Tools of the trade

Even with discounts, we have spent hundreds, if not thousands, on gear and tools and training for him at various jobs. All that on not particularly high wages, really. True, you can take some of these with you to new jobs … but that’s if the stuff doesn’t wear out or break or expire first.

I’ve never been expected to pay for things that I need to carry out my duties at work. There was one time I paid for a design/photo-editing app out of my own Apple account and didn’t submit for reimbursement. DON’T do that by the way! It was certainly not expected, and I kick myself now for that. What was I thinking? (I was thinking that I felt grateful for the salary at my new job and I could easily absorb the cost. NOT the point.)

But HOW do they afford it?

Paris Cafe
By: Pat Guiney

Once upon a time, I found myself out to brunch with a group of people I didn’t know very well. One thing we did have in common, though, was a love of food. Personally, I rarely go to the movies, live shows, concerts, etc – my favourite form of entertainment is eating. And yes, that often means eating out. For someone who loves food, I’m a lot better at consuming it than creating it. Sigh.

But where I might eat out once or twice a week, it sounded like some of my brunch companions were eating out most nights, sometimes even twice a day. It’s not like they were eating cheap takeaways all the time, either; these were people with a more sophisticated palate than that.

I couldn’t help but wonder how they could afford to do that. I’d love to eat out that often, too, but it would not be a frugal move at all. Quickly doing a rough calculation in my head, I figured I might actually be able to swing a similar dining out budget – but it would totally eliminate my ability to save anything at all.

Normally, my friends and I talk pretty openly about money but these were definitely acquaintances, not friends. All I could do was speculate silently. How much were they earning?! What did their incomes vs outgoing costs look like? Did they save money regularly?

It seemed like such a contrast to how I personally approach money. I literally sleep on almost every purchase I make – even a small one, like buying a new cardigan. I will agonise over whether the cost of petrol for a fun weekend day trip is worth it. In short, I beat myself up over the smallest things.

Now that I think back, it’s likely they were making a lot more money than me (advertising/marketing vs journalism). Fair play. Heck, I ate out a lot last month – a few highlights here – making the most of our Entertainment Book membership before it expired. (Best of all, the membership itself cost nothing: yay for freebies.)

 

What constitutes ‘real’ savings?

What is 'real' savings anyway?

I recognise this will vary. When we were broke uni students, a grand or two in the bank qualified as a little nest egg. These days, it’s probably something in the five-figure range.

The other day, though, I was carrying out a mystery shopping assignment at a bank. Part of my fake scenario was having ‘no real savings’, which was specified as no more than $30k max.

Call me crazy, but is that not sufficient to qualify as ‘real’ savings? That is a significant chunk of money. Particularly as I was also supposed to have a ridiculously small amount left on my fictional mortgage ($200k) so it’s not like I’d be saving hard for a down payment in this scenario. And, if you had much more than $30k, you’d most likely be investing it rather than have it sitting in a savings account anyway.

I tell you, I felt ridiculous sitting across from that bank staffer. I wound up specifying that I had $10k in the bank (the best lies are those that stick closely to the truth!) which she sort of chuckled/snorted at and said ‘that’s a lot!’ And I felt like apologetically adding ‘yep, had some help from the parents’ or ‘married a rich dude’ since there’s no way I would have that small of a mortgage balance at this age. It didn’t help that I think she thought I was even younger than I actually am.

If I’d been in her shoes, I would’ve hated me so much. She scored awesomely on the assignment, so at least there’s that. And who knows, she might have found out that I was the surveyor, and not a real customer.

How much would you say counts as ‘real’ savings, in your world?

 

Would you pay for this? (Also: we’re going to Japan!)

We're going to Tokyo!
By: Luke Ma

I subscribe to a handful of travel deal newsletters, and among these is Jetstar’s weekly Friday flight alerts.

Normally I scan the subject line and delete right away. But one day in November last year, the phrase “2 for 1” caught my eye.

Even with all the add-ons that budget airlines slap you with, a 2 for 1 fare puts you well ahead! And thus, we’re going to Tokyo in September.

Assigned seats

Would you pay $5 to guarantee you and your travel partner could sit together on a flight?

Personally, I wasn’t sure at first. After all, on our flight from Reykjavik to New York, we didn’t get to choose our seats (either we checked in too late, or I missed that step somewhere along the line) and T and I wound up sitting several rows apart. And that was totally fine. It must be said, though, that this was toward the latter part of our trip , so we’d already spent a ton of time together.

But $10 (for both of us) per flight in the grand scheme of things is not a lot, so I stumped up.

Extra legroom

I am slightly toward the tall end of average for a woman and even I feel claustrophobic in economy class. So I have lots of sympathy for T.

I think it was on one of our short European flights that we got to change seats with another passenger in the exit row, and enjoy extra legroom for free. Let me tell you, that was a revelation!

Anyway, I balked at the $45 price tag for seats in the rows with extra leg room, but T‘s best sad face convinced me. And since it’s not possible to sit together and have only one person get extra leg room, that came to $90 per flight. (I would sit apart to save money, but apparently that wasn’t acceptable.)

It might even be worth it for me. I gotta say, the older you get, the more you’re willing to pay for comfort.

Hot food

The in flight meal menu looked absolutely dire. And this is where I drew the line. No way am I paying for what looks like a terrible attempt at a meat pie, or chicken and rice. Instead, we will fuel up and stock up at the airport before we leave.

Why I’m WAY more worried about buying a house than retiring

Why I'm more worried about buying a house than retiring

New Zealanders have not traditionally been great at saving for retirement. (I doubt we are the only country in this boat.) KiwiSaver was only introduced in the last 10 years and still has a lot of skeptics.

Honestly, if I’d never come across personal finance forums and blogs, I wouldn’t be particularly worried about retirement savings. I might have left my contributions at 4 percent and never increased them.

But here’s the thing. Governments have proven they are unwilling to tinker with NZ Super. And the only parties willing to do anything about the state of rental housing have wound up on the wrong side of power.

To me, then, the logical and pragmatic thing to do is to continue to pursue home ownership. I’m not counting on the government to do anything about quality, affordable housing, either rented or owned. Current policy encourages buying – the latest change would double grants for first-time buyers who are building a new house, not unlike the Homestart first home buyers grant in Perth – and nearly 10 years of renting has well and truly turned me off renting in New Zealand. I see buying as the more likely route to securing a healthy and stable future for me and my own. Our chief human rights commissioner summed up things pretty succinctly in a recent speech: “…If you can do so you will do what it takes to ensure your family live in an adequate home … many people are not fortunate enough to find a landlord that they would trust to do that.”

Since the government seems far more likely to cater for me in my twilight years than ensuring healthy housing in my best ones, I’m going to prioritise getting into a house over retirement for now. I used to be pretty set on not touching my Kiwisaver account for a down payment. (I don’t personally think it’s a great idea to enable people to withdraw even more money from their Kiwisaver accounts to buy a house, as new rules will soon allow.) But I’ve changed my mind. I’m not going to rule out drawing on it – that’s drawing from, NOT draining it, to be clear – if that’s going to mean the difference between owning and renting.

I’m tired of the terrible quality of rentals. Mushrooms and mould do not belong indoors, ever. As property owners get richer selling houses to one another, people priced out of buying have to make do with substandard rentals and no legislation to protect them from shoddy, unhealthy properties. For a country that’s been at the forefront of things like gender and marriage equality, it’s well past time we got onto the basics of housing equality.

I’m tired of being on the wrong side of rising prices. Just a few years ago when I graduated, $360 a week could get you 3 bedrooms in my area. Now it only gets you 2 on average, and I guarantee in another year or two, it will only get you 1 bedroom (and a lot of the smaller 1-bedders forbid couples. AWESOME). This is an untrendy fringe area; prices are much higher in more central suburbs. Our city is growing and there’s not enough housing. Auckland is the Sydney, London, or New York of New Zealand. I do not see this trend reversing. I think high (and rising) prices are the new normal – here to stay.

I’m tired of the uneven playing field. I have the privilege of having the kind of job where I can duck out of work during the day to go to a viewing, but even I can’t do this all the time, and you need to do this at the drop of a hat when you’re actively hunting.

I’m tired of the instability. At any time a landlord can decide to cash in and sell out, displacing you, (and of course increase rent).

Like marriage or having kids, home ownership will be bloody hard … but I believe with all my heart it beats the alternative here.

Not every rental is crap and not every owned house is warm and dry – there are always exceptions. But in broad terms, there is a divide. When you’re an owner, you have the option of taking action to address the root causes of issues with your house. I can’t wait to have (or install) decent insulation and maybe even a heat pump. When you’re renting, you simply have to put up. I personally tried to do my bit for the cause by going beyond the numbers and highlighting the quality issues in a recent magazine article on renting vs buying, but what we need is sustained mainstream coverage.

There’s a reason multiple political parties put their support behind standards for rental housing this year. There’s a reason people are talking about this issue (though as has been proven, Twitter/the internet are far from representative).

Three things I’m grateful for right now

Trying to be grateful...

So, here’s the reason I’ve been feeling down in the dumps lately. We made a decision that T would leave his job with nothing lined up (a first for us and an extreme move, yes – a topic for a separate, upcoming post).

That’s put us back to one income. We are definitely not living for today OR saving for tomorrow. Thus = unhappy me.

Rather than run down the street screaming, as I felt like doing at one recent low point, I thought I’d focus on the few things I’m currently grateful for.

(And I’m going to bite the bullet and book in a haircut – I’d been putting it off until he got back to work, but that is just ridiculous considering my haircuts are $30.)

Interest rates are on the rise

I’m currently earning 2.75% in my online savings account with my main bank, and 3.40% in my other savings account with my online-only bank.

Cheap rent

When we were searching for a place after returning to NZ, we were a one-income household. Not knowing when T would find work, it was important we live somewhere that I could afford alone. Since he’s been out of work for about half of this year, this has proven a good move, even if this place is like a deep freezer in winter. Low absolute rent also means it will be easier for us to save for a down payment … at some point.

Our rent is going up $20 a week next month, which I’m not happy about, but I’ve already been watching listings and there isn’t a lot of choice out there. We have a fantastic location and while it’s freezing and we don’t have a full kitchen, at least it’s not damp. Summer will be okay here and I think I can survive one more winter. Beyond that, we will either be on track to buying and decide to stick it out a bit longer, or give up on ever buying and fork out for a decent rental (whether agents/landlords will deign to choose us as tenants is the other hurdle, of course).

Side income

Being down to one income has meant more or less giving up on saving during this period. Yay for side income, which goes into my higher interest online savings account/mutual funds and stays there.

What are you feeling grateful for today?

Things I WON’T do to save money on travel

Camp

I don’t consider myself high maintenance, but I do have a minimum comfort level and camping does not meet it. I’m fine with hostels and seedy motels (“How do you always find the most ghetto places?!” T complained to me when we went wandering around east Berlin in search of our hostel) but I’m just not a tenting person. On a scale of 1 to Major Pain In The Ass, setting up and packing down tents rates just above scrubbing the toilet for me.

Hitchhike

First, the realities. I mainly travel with T, and nobody is going to stop to pick up someone who looks like him. I wouldn’t! Even our host in Munich, who’d been urging us to think about hitchhiking around Germany, demurred once we actually turned up and he met us in the flesh.

Even so, I don’t like uncertainty, and relying on passing cars to pick you up is about as uncertain as it gets in travel. (I remember waiting for ages one day for our Couchsurfing guests to arrive and wondering if they were going to turn up at all. Turned out they were at the mercy of hitching, and didn’t have a way to contact us to inform us.) Also not super keen on standing outside for potentially hours on end in any weather conditions to save some money.

Taking flights at crazy times

Super late flights may be a little cheaper, but that’s not the end of the story. There’s nothing worse than arriving  in a new city trying to find your way around in the dark! Public transport may not be running by the time you arrive, so you might have to take an expensive taxi, potentially negating any flight savings. In small establishments the front desk might close at 8pm. And it just screws up your schedule and body clock in general.




Where do you draw your lines?